Increases to Electricity Tariffs – State Budget Review

Traditionally, 1 July sees annual increases to electricity costs across the South West Interconnected System (SWIS) and the Horizon Power network, and this year is no exception.

With the Western Australian State Budget being deferred until early September, however, The State Government has already announced the tariffs applicable for the forthcoming year, with changes being effective from 1 July as per usual.

The State Government sets both residential and business retail tariffs for end users in the South West Interconnected System (SWIS) and the Horizon Power Network, meaning these changes apply to residential and SME in Perth and regional Western Australia.

The overall is increases across the board, with usage rate increases ranging from 1% to 11%.

“Price increases in 2009 were the first increases since 1998 for residential customers; the first increases since 1992 for small business. However, increases have been applied each year since.”

From 1 July 2017, the residential tariff will experience the usage rate remain the same, but the daily supply charge is increasing by 95%.

Small business tariffs for non-contestable customers (<50MWh/year) will experience a 10% increase in both supply and usage charges. While its equivalent contestable tariffs, for customers using greater than 50MWh/annum will experience a 1% increase across the board.

Time-of-Use tariffs will increase by 11% for non-contestable customers and 4% for contestable customers.

Why do we see these years on year increases?

Increased upgrade and infrastructure costs; how will this be affected if Western Power is privatised? Has the uptake of renewable energy affected these costs, was this uptake not considered previously?

Generating and transportation costs have continually been increasing over time.

Reduction of WA Government Subsidies; in 2015-16 the State Government was estimated to pay a $350 million subsidy, is this sustainable? There has been talk of the subsidy being slashed, are these increases to the end user as a result of the subsidy being reduced? Are costs increases this rapidly?

Last year it was announced that some generation might be due to come offline, i.e. shutdown, this sparked Wholesale Electricity Pricing to increase by >30% overnight.

It has been announced that the Economic Regulation Authority (ERA) has confirmed that Western Power pricing will remain unchanged for 2017/18, is this true? Historically, we have seen year on year increases across Western Power Network Tariffs, these flow through to all end user regardless of tariff or contracting structure.

The State Budget is set for publication in September, what other changes should we expect across our utilities?